FORMULATION OF INDONESIA’S GREEN GROWTH PROGRAM
By: Suhardiyoto Haryadi
“The Government of Indonesia and the Global Green Growth Institute (GGGI) have embarked on an innovative collaboration together: the ‘GoI-GGGI Green Growth Program’. Through this new Program, we are developing a framework and a suite of tools that can be used to help mainstream green growth into existing planning and investment appraisal processes,” Dr. Ir. Lukita Dinarsyah Tuwo, MA, Vice Minister of National Development Planning Ministry-GGGI Council Member Representative
1. Indonesia’s Green Growth Opportunity
Key messages:
● Indonesia’s national development agenda is focused on a pro-growth, pro-jobs, pro-poor and pro-environment approach
● A systemic approach with tools and processes are needed to help the implementation of these
commitments
● GoI and GGGI are collaborating to demonstrate how the Government’s existing planning instruments could achieve green growth outcomes.
● This work will help to create investment opportunities that are attractive to the private sector, in line with
Indonesia’s ambition to increase both Foreign and Domestic Direct Investment’s contribution towards
development spending.
As outlined in the RPJMN:
The RPJMN 2010_2014 forms the basis for ministries and government agencies when formulating
their respective Strategic Plans (Renstra KL). Regional governments also must take this medium
term plan into account when formulating or adjusting their respective regional development plans. For the implementation of the National Long Term Development Plan, the RPJMN is to be further
integrated into the Annual Government Work Plan (RKP) that will then become the basis for
formulating the Draft Government Budget (RAPBN). These plans are broader than just GDP growth
and are important for Indonesia’ four track development approach. As yet, there have been no
systematic and holistic efforts to develop economic policy in line with the principles of green growthand sustainable development.
2. Mainstreaming Green Growth into Indonesia’s Planning Process
Key messages:
● A systemic framework to measure green growth must be tailored to focus on the policy priorities of
Indonesia.
● The starting point to measure green growth, the Green Growth Framework, has been designed in close
coordination with key stakeholders and will continue to evolve.
● The Green Growth Framework can also be adapted at provincial and district levels, to ensure relevance to
local priorities and stakeholders, including the private sector.
● The Green Growth Assessment Process is a tool in development to support decision makers in projects with high green growth performance through feasibility screening and an assessment of their green growth
potential.
Definition
Green growth is essentially an approach to achieve a number of simultaneous objectives bringing us closer toachieving true sustainable development: avoid and curb greenhouse gas emissions, build resilience to climateextremes and longer term change, use resources more efficiently, provide sustainable and equitably-distributed increases in GDP and standards of living, and value the often economically invisible natural assets that have underpinned economic success over the centuries. The definition of green growth is still evolving; itis the experience of countries testing what works - and what does not that will further develop and refine thisdefinition.
It is very important to understand that achieving green growth in Indonesia will take time and green growth
planning cannot be done all at once. There are multiple definitions and uncertainty in building the best framework of green growth planning and assessment, including identifying green growth priorities, the right
sources for data capture and analysis, appropriate selection of performance indicators, and adoption of the
best available economic modeling tools. It is necessary to develop a conceptual framework and methodology to determine the most
appropriate steps and take the right approach to develop the framework for green growth planning.
Objectives
The joint GoI and GGGI goal is:
“To promote green growth in Indonesia that recognizes the value of natural capital, improves resilience,
builds local economies and is inclusive and equitable”.
The specific objectives to achieve this goal are:
• To ensure the green growth vision matches or exceeds existing development targets;
• To track the green growth priorities of Indonesia by providing relevant targets and indicators;
• To evaluate the implications of the country’s current development path against green growth targets and
indicators and assessing projects and potential policy and investment interventions against this baseline;
• To identify the key sectors and high green growth potential projects and investment interventions that will help deliver green growth development;
• To harness private sector engagement and investment in support of delivering green growth opportunities in Indonesia;
• To undertake economic modeling to analyze each project showing their financial returns and identifying
any gaps in the incremental spend required to secure green projects.
A program of three complementary work components has been set up to meet these objectives:
➊ Greening the planning process
“ To mainstream green growth within Indonesia’s economic and development planning processes”
“ To increase the use of green technology and increase capital investment in green industry”
➋ REDD+for green growth
“ To support the development of a funding mechanism that disburses REDD+ finance to catalyze green
growth”
➌ Regional engagement
“ To support key provincial governments in prioritizing and implementing green growth”
The combined work of these components will help achieve the objectives and the overarching goal of the
Indonesia Green Growth Program.
3. Collaborating to Deliver Green Growth
Key messages:
● GoI and GGGI are engaged in a collaborative process to shape Indonesia’s green growth vision and
objectives.
● The engagement process is designed to interact with national and provincial interests, the public and
private actors, and civil society.
● Stakeholder engagement and capacity building lie at the heart of the green growth transformational
process at national and provincial levels.
Engaging stakeholders to deliver change
The Green Growth Program is aligned and wholly supportive of achieving Indonesia’s existing vision for
economic development planning. It is vital that this green growth planning process is stakeholder driven and nationally owned. The Program itself was officially launched in June 2013, which was attended by
representatives of the Government of Indonesia, development partners, businesses and NGOs. The
stakeholder engagement process has involved a number of key milestones already involving both national
and provincial level stakeholders. Various workshops including methodology, business, sector, and provincial workshops have brought Indonesia’s academic experts and government officials together to test the green
growth planning approach.
The increasing role of the private sector
To achieve annual average economic growth of 6.3-6.8%, IDR 12,000 to IDR 12,500 trillion (around USD 1.2
trillion) will be needed cumulatively over five years. Given inflation, this is broadly consistent with investment levels seen in the last few years; totaling
10,300 trillion. Of this, the government is expected to provide around 18%. Clearly, the private sector will
play a large role in maintaining overall investment levels; Foreign Direct Investment (PMA) will play a
substantial role (reaching around 12% of GDP in recent years) as will Domestic Direct Investment (PMDN),
whether from retained earnings or financial markets and financial Institutions.
Capacity building objectives
The capacity building objectives aim to enhance capacity in using a range of tools and methodologies to help mainstream green growth planning into existing economic development planning processes and improve the availability of trainers and materials. Through the Program, long-term technical support to stakeholders in
Indonesia will allow for effective transfer of skills drawing upon both international and local knowledge and
experiences.
4. Roadmap to Deliver Green Growth
Key messages:
● A roadmap will bring together project analyses, a study of green industry/enterprise opportunities and
macro level analysis which are all already underway.
● It provides a guide to mainstream green growth to stakeholders that will allow stakeholders to recognise
and act on problems that require their response.
● It helps to prioritise actions upon agreed issues and focus areas since a Green Growth Roadmap helps to
identify what is needed in the short, medium and long term to achieve the vision for a green economy in the context of sustainable development in Indonesia.
The Program will bring together a coherent Roadmap to Green Growth and link the visioning work, the work on measuring green growth, and the extended CBAs of projects. It will be an indication -by way of examples -
of how to advance green growth in Indonesia through a systematic approach.
The Roadmap will link together the macro-economic opportunity of green growth with the micro-level project and policy interventions that will help deliver this opportunity. The Roadmap will set out
timeframes for implementation of the various projects and policy interventions at both macro- and micro-levels.
The performance of the Green Growth Program itself will be tracked through establishing a clear monitoring and evaluation framework, and developing a suite of relevant performance and process indicators and
targets to help track progress against the Green Growth Roadmap.
Excerpted from “Government of Indonesia-GGGI, Green Growth Program, Prioritizing Investments: Delivering Green Growth,” October 2013.
